captioning sponsored by macneil/lehrer productions >> woodruff: the u.s. economy grew at a sluggish pace in the second quarter this year as americans cut back on spending. good evening. i'm judy woodruff. >> warner: and i'm margaret warner. on the newshour tonight, we get two views on what the lackluster numbers mean about the strength of the recovery. >> woodruff: then, we update the colorado shootings as court documents reveal the suspect was being treated by a university psychiatrist. >> warner: as the games begin in london, ray suarez examines what host cities get out of the olympics. >> woodruff: mark shields and david brooks analyze the week's news. >> warner: and we close with the scandal that's rocked beijing, after the wife of a chinese official is charged with murder. >> woodruff: that's all ahead on tonight's newshour.

major funding for the pbs newshour has been provided by: bnsf carnegie corp and with the ongoing support of these institutions and foundations. and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: the "great recession" officially ended three years ago, but the latest look at the u.s. economy today suggests a full recovery is still a long way off. the struggle was highlighted in a report from the commerce department.

consumer spending powers the u.s. economy, but americans weren't hitting the stores this spring, and when they did, they weren't spending nearly as much. as a result, economic output, measured as the gross domestic product, rose at an annual rate of just 1.5% from april through june. the commerce department did raise its estimate of first quarter growth to 2%. still, that's not considered sufficient to encourage hiring and bring down unemployment. at the white house, spokesman jay carney pointed to 12 straight quarters of growth, but acknowledged it's not enough. >> we obviously, despite this, sustained growth, despite the private sector job creation, are still in a position where we're pulling ourself out of the very deep hole caused by the great recession. and there is still, of course, a great deal of anxiety in the country about the economy. >> woodruff: mitt romney's

campaign charged the new numbers are further proof of "a grossly disappointing presidency". romney's top economic advisor glenn hubbard spoke on cnbc. >> i think it's very disappointing for the future of the economy. it's about half of what potential growth actually is in the american economy, and recovery should be much more vigorous, even after a financial crisis. if we can't keep up at this rate over the next year or two, we will simply never get back to full employment. >> woodruff: other reports this week also raised concerns: orders for most durable manufactured goods were down in june for the third time in four months. and sales of new homes also fell sharply, after rising in may. on a positive note, first-time jobless claims have been declining this month. but all eyes will be focused closely a week from now when the july unemployment report is released. meanwhile, u.s. investors and policymakers are keeping a

weather eye on europe, where on thursday, the head of the european central bank, mario draghi, sought to tamp down talk of a euro-zone breakup. >> within our mandate, the e.c.b. is ready to do whatever it takes to preserve the euro, and believe me, it will be enough. >> woodruff: and today, german chancellor angela merkel and french president francois hollande made their own pledge to preserve the euro. those promises by european leaders fueled a rally on wall street for a second day. the dow jones industrial average gained more than 187 points to close at 13,075. it hasn't been that high since may. the nasdaq rose more than 64 points to close at 2,958. for the week, the dow gained 2%; the nasdaq rose 1%. for more on l this, we turn to david wessel, economics editor of "the wall street journal" and author of "red ink: inside the

high-stakes politics of the federal budget"; and mark zandi, chief economist at moody's analytics. gentlemen thank you both it's good do have you with us. good to be here. >>. >> we have heard about what others said about these growth numbers what do yo do you think. >> i an i think it's distressint we went from a slow growth situation. there is a dark cloud on the hor rye when benbe benber knack ci confe yesterday he said it was stuck in the mud. that is not aut not a good plac. these are weak numbers. theeconomy is growing too slowly to bring down the unemployment

rate. the unemployment rate is over 8% and it makes us vulnerable. there is lot of things that could go wrong. there are a lot of dark clouds. and we are still growing. >> so i hear you say we are growing. do you see something pose searchtive that i-- positive ths not obvious. >> the housing market is turning. and the housing downturn was ground zero for the problems and the catalyst for the great recession and a head wind for the economy. that has turned. and you can see it in the gdp up in. housing will be the source of growth in the future. the thing that is important the american businesseses have done a marvelous jobs restructuring and getting their cot cot-- coss

down. it's a question of willingness and fen confidence and confidene can turn quickly. >>woodruff: i if though are the underlying factors why the discouraging picture. >> >demand in the u.s. ha beenweak. consumer confidence came out today have been as low as they have been so far this year. if people don't spend and foreign economies are slowing down and recessions in europe are slowing and economies in asia american business will say why should we invest if key-- we don't have any customers to sell the goods. there is attention and something needs to get them off the dime. >>woodruff: and what would that be? >> i have no idea. if europe got it's act together that would be a plus. when mario said he would do whatever it takes.

the markets rebounded. if europe got it's act together that would be a big relief on businesses and investors. and similarly in the united states we have lots of problems but some of them are politicians made. the fear that the end of the year is going to be fiscal chaos could go away if the politicians reach some sort of compromise and that may boost spirit and get people investing again. >> that is the key, judy. i think it's confidence and it's sentiment. there are two things weighing on the collective psyche on the psyche of american businesses and households. one is europe and that has been a real significant problem. that feelings -- feels a lot les threatening today. that is unewif unewifeequivocal. and that is going to the remain with us for the election next

year. it's hard to see us going anywhere fast for the nexting six is ttonine months. and by this year confidence will return and we'll be off and running. >>woodruff: i heard mark zandi say there could be movement in europe and among policy makers here. >> that would be good. the question is whether mario drogi can deliver on the rhetoric. a lot of this has to do with the politics of europe. and have you been a student of washington politics for a long time. i'm not sure that the politicians are showing me anyways that they are able to come together and cut a deal on the deficit in dim time to avoie fiscal cliff. >>woodruff: what makes you think they might mark zhandy? >> both parties have leverage in this debate. the bush era tax cuts are coming to an end under current law.

that gives leverage to the democrats. we have budget cuts that are part of the deal that we struck tto raise the treasury debt ceiling last summer. thawe are going to cut the defee and non-defense budget and we have the debt ceiling that has been increased next year. and when you have this kind of situation with both parties having negotiating power it's a prescription forgetting a deal. >>woodruff: it sounds like you don't see it. >> mark has analyzed the situation right. both in europe and in the united states we have a lot of people playing the game of chicken. no one wants the sequestering and no one wants the taxes to go up and nobody in europe wants to blow up the euro in a messy way. can they still t stumble their o the compromise. and it leaves us vulnerable to something not on the horizon.

the middle east is not the most stable place in the world. iran and syria who knows what is going to happen to oil. we are seeing food prices going up because of the drought. with the economy growing slowly and europe and the recession it wouldn't take much to make it worse. >> warner: still to come on the newshour: the shooting suspect under psychiatric care; the pros and cons of hosting the olympics; a murder charge in china; and shields and brooks; but first, the other news of the day. here's kwame holman >> holman: there were new warnings today the syrian government is preparing a full-scale assault on the city of aleppo. the u.n. human rights chief echoed u.s. concerns about the potential for a massacre. military helicopters and artillery continued heavy firing into the city. they've been battling rebel fighters for seven days to retake control of the country's commercial capital. meanwhile, in oslo, norway, the outgoing head of the u.n.'s monitoring mission, said the syrian regime is bound to fall.

in olso, norway the syrian regime is bound to fall. it's impossible to imagine a perspective syria where though in power today are still in power. it's a question of time we when >> holman: thousands of residents have escaped the violence by fleeing to neighboring turkey. insurgent attacks in afghanistan are rising rapidly. nato reported today there's been an 11% increase in attacks over the past three months compared to the same time period last year. also today, a nato service member was killed in eastern afghanistan. there was no announcement of the soldier's nationality. those are some of the day's major stories. now, back to margaret. >> warner: and we turn to new information about the suspected shooter in the aurora, colorado, theater rampage one week ago. a dozen people died, and 58 more were injured. today, court records disclosed that the alleged gunman, 24- year-old james holmes, was seeing a psychiatrist at the university of colorado in the weeks before the shooting. carol leonnig is covering this for "the washington post," and i

spoke with her a short time ago. carol thank you for vote be taken by yeas and nays. you. tell us about the new informing yoinforming-- informing you have been reporting on this afternoon. >> it shows that holmes the suspect in the shooting in colorado was seeing a psychotherapist or psychologist in his university where he was a grad eighgraduate student. she was a medical director for the out patient clinic for mental health treatment for students. and she was seeing him for sometime before this tragic event. >> first of all how did this information come out? >> this information comes to us, we have been working on a lead about this exact piece of

information and had been asking the university for a few days about it. it came d to light and not confirmed by the university by by a motion in a court record in which the public defender who is representing james holmes in this case argued that the information about his connection, holmeses connection to a psychothey artherapist wasd to the media this week. you may remember there was a lot of media attention to a notebook that was seized by police in this investigation at an out patient facility at the university. the attention to it was so dramatic because it was a knot boo--notebook that was supposedo foreshadow this attack and holmes had sent to a psychotherapist. >> tell me what is known about there psychotherapist. is there anything in the court recording to say what he was

seeing her for ther. >> there was nothing in the record to say what he was seeing her for. if you go to see a psychiatrist you go for counselling. they are different than a general counselor they can give you medication for your mental health problems. the other indication about what this could be about is the specialty of the clinician. lynn fenton was the doctor in the case and her specialty was schizophrenia. and she has done lectures around presentations on bipolar disorders and border line personalities. but her research is on schizophrenia. she treats according to the website for the center she treatment 15 to 20 graduate students in her psychiatric practice. >> go back to the notebook. there have been reports about it. what have you been able to

determine what was in the notebook and who was it mailed to and did anyone at university see it before the shooting? >> ok. this is a bit. dawnfuzzy but ourinformation iss notebook is for real. the court records confirm that. it was sent from holmes to somebody in building 500. it's our understanding that is lynn fenton the psychiatrist he was seeing. my information from two different sources is that this document had information in it that could have provided a hint of the attack to come. as you probably no other media have reported that this notebook contained scary drawings of stick figures who were carrying guns and mowing down other stick figures with weapons. which is haunting based on the attack that took place in the

aurora movie theater in which allegedly james hom holmes mowed down 70 people in a sold out batman showing. >> has there been anyone that looked at it? >> excellent question, march get. no. to our knowledge it doesn't appear that anyone opened this package. the university says it was delivered to their mail room on monday. literally it was seized within hours of being delivered. other reports say it was delivered a week prior and sat there unopened. that is in dig in dispute. our information is that it was never opened. our question is how long was it sitting there before the police grabbed it and someone looked at it and wondered if it was a foreshadow of the event. >> before we go what is expected for the hearing on month.

month-- monday. monday is scheduled for holmes to face the actual charges. is he charged with murder one or murder two or assault with intent to kill. what are the charges? now the judge sylvester has decided to hear the arguments from the defense and the pro prosecution about the leaked information about the psychiatrist and the notebook. >> this will not be televised? >> no it won't. and what is interesting about the judge in the case he has issued a gag order to the parties to not discuss the pending case but this week he clamped down furtherer and said the colorado university was compelled by him not to release any open records to the media about james holmes. even though the open records law in colorado would have naturally allowed the release of some of these records. >> well carroll thank you so

much for taking the time to do this. >> woodruff: it's time for the games to begin. the opening ceremonies of the summer olympics got underway just a few hours ago. it's a big moment for london, where excitement has been growing. we start with a report from paraic o'brien of independent television news. >> reporter: 12 minutes past 8:00 this morning, the country's olympic alarm clock went off-- a nationwide art project to greet the official start of london 2012. it's very exciting. i think there is a huge >> reporter: on hms belfast, his culture minister was managing

expectations, which was just as well-- as we hold our breath, he gave us a delicious chance to exhale. ( laughter ) there we are. >> reporter: michelle obama was encouraging children to participate in sport. she was also giving american athletes permission to take a deep breath, albeit with slightly more panache. you all take advantage ever everything, stop, look around you i know in my position sometimes i don't get a chance to breathe or take it in. this only happens every few years. try to have fun and try to breathe a little bit but also win, thanks. in the

>> reporter: and all the while, the olympic torch getting closer and closer. it's been seven years coming. there've been security concerns, transport worries. it's cost over 9 billion pounds. once in the clear, matthew pincen brought it to the royal barge, the "gloriana." 16 british oarsmen took it on board, including two men in then to tower bridge and the final stage of the relay. ahead of tonight's ceremony, the queen greeted world leaders. >> to me this spirits of togetherness is the most important part of the olympic

ideal. and the british people can be proud of the part they have played in keeping the spirit alive. >> reporter: soon we'll get answers to the questions that remain. who will light the torch? how many medals will we win? will britain pull it all off? ( cheers and applause ) and who knows-- after tonight's ceremony, we might even be closer to an answer to this question-- "who are we?" >> warner: and ray suarez takes the story from there. and ray suarez takes the story from there. for london clearly there is huge money, reputation, and national pride at stake over the next two weeks. when all is said and done, will hosting the games have been worth it? it's a question that host cities often find find themselves askig with different consideration. we will look at some of the them with the pro guess professor who has written widely on the modern games and andrew zimbliss.

every four years cities line up with theirlaborate olympic proposals and say they are ready to host the games. can any olympic host cities point to a plan that worked? >> they work operationally in the sense that the games happened with a few hitches most of the time. but in terms of economically the last success story we can point to is in 1992 in bar lope that. lope-- bar loan that. bar-- barcelona. >> why is that. >> there is come trying to host the games. -- competition to host the games. they have bids with fancy stadiums and transportation and infrastructure investments and security proposals. and at the end of the bidding the cities bid away any profit they may have. in fact it's wors worse than the

city's interests are hijacked by private interests if the cities host the game. construction companies and construction unions and architectal firms and investment bankers and they form a coalition that they can only gain from the olympics and they push the bidding too far. once the olympics happens it's 17 days of festivals and spectaculars and it's over. you are left generally with a dozen permanent venues that have to be kept up and maintained. it may cost 10 or $20 million a year for that. and very often it's not properly planned. so the olympic venues are not used or used very infrequently afterwards. the birds' nest in beijing is scarcely used right now even though it cost close to a billion dollars to build. wit>> with everything just mentioned we have been using the phrase "too big to fail" when

referring to the big banks. are the olympics to big to stage. >> that is an issue on the plate of the international olympic committee these days. and the debate in backstage international circles. putting on a game is quite aside ifrom the legacy economic issues is such an operational challenge and has become exceedingly more so, we forget about beijing as a model. there you have complete state control and unlimited budget and as a consequence organizational issues were almost non-existent. there were other political issues of course. but for cities like london and other upcoming cities, things have gotten extremely difficult just to manage. we actually in contrast to something that anders said earlier there is only three bidding december now fo--citiesw

for the 2020 games and two madrid and tokyo have their owner is jusownerownserious iss. >> and the ioc is worried that the games are have gotten too big for the cities to stage. >> are there intangibles things on the balance sheet that are hard to count but a plus for the host city. >> absolutely. i think the mistake to see the bottom line as a profit and loss sheet, and incidentally all recent olympic games have broken even on the operational side but the issue is how much do you build. the cities will take the opportunity to build the political capital to advance infrastructural work not only building venues and increasing venues are temporary, and increasingly they are prepurposed and increasing the white elephant issue is being

handled. moving ongoing improvements to infrastructure. london with it's 15 billion-pound budget eight or nine is in improvements to the london transportation system. you couldn't get that political capital particularly in a time of such austerity would yo withs large project accelerating it. there is a political capital and morale capital. do you inspire your citizens and give them a sense of solidarity and tough time that make it easier to go forward. those are hard things to quantify but they are everywhere discussed and any place that has held the olympic games. no city known to me that has had the olympic games has ever in the post facto poll had a majority declare they were sorry the games had come. >> how about nbc?

they have paid a huge amount of money to broadcast these games and they are doing it in a different way. instead of shuttling their viewers and their eyeballs to weekly prime time nights you are able to watch olympics around the clock on everything from your phone to a theater sized screen. >> it's an interesting model. they are spending $1.44 billion for the rights fees connected to all of that. they have 25 reporters and 450 people staff people working the olympics. they are making an enormous investment. it's a case that the nbc nightly news and various other shows are highlighting the events. it's taken over the whole channel for a periods of several weeks. at the end of the day they are going to sell more than a billion dollars of advertising and they will be able to promote their fall shows and do

something for the nbc fans. they are hoping it will pay off. >> is there something different at stake for the next venue rio? >> rio's carnival has volumes of visitors and media attention as well. the problems are shared. the games have become so big because of the extraordinary growth of the credited and non-credited journalists and same 10,000 athletes and the entourages that corporate responsesponsors and world vip 0 heads of state are bringing with them. this is taxing any cities and even the most global city's ability to cope. a huge under taking to be sure.

>> woodruff: and to the analysis of shields and brooks-- that's syndicated columnist mark shields and "new york times" columnist david brooks. welcome. we'll talk about the olympics and let's start with the economic growth report out today. what is it going to mean for the campaign. >>. >> it's bad news. it's interesting that there are 7 presidents elected since world war ii but when they were elected the growth has risen 4%. we are talking about less than 2% right now. george bush was elected with 2-point and ic eisenhowerer 2.3d when the economy is the central determining issue in the

campaign which it in this campaign it can be nothing but bad news right now for the president and his campaign. >>woodruff: nothing but bad news for the president? >> i agree. reagan started with 10% unemployment and he had growth up at 6% and now we are under 2. the dangerous thing for the president is the deceleration. we are still growing but the rate of growth is going down. i can't think of anyone that has won an election with a decelerating rate. as they have said earlier in the program it makes us volunteeringeer-- vulnerableto . europe and iran. there are so many black swans out in that it makes it, you you know, very fragile. we heard that david and mark disagreed on what could happen. there are things that could happen in europe and in this country if congress could get it's acts together. is that what the economy is

hostage to at this point? >> i'm not sure if anyone is sure that there is a single act. it's hard to make the case that if the president and congressional leadership did come to a summit and did forge an agreement to take us back from the prospect of the fiscal cliff that everybody seems concerned about and understandably, next january in prospectprospect that would hava stabilizing and confidence building reaction in people. i don't know if that is doable in a campaign. i don't know if there is much good will or a sense of anxiety or nervousness of the parties on both sides. i think it would take something that dramatic. >>. >> i don't really see it. when you look at the data and they do these numbers and they redo the historic numbers in'09 it went down further than we thought. in the fourth quarter of'09 it

went up. and then in the fourth quarter it levels. and then it has just been scuffling along with the deceleration recently. so i don't know what happened in'09. some of it was baked in with the financial crisis. but even with the financial crisis you don't expect to see deceleration over the last couple ever-- counsellin couple. it's baked in with the lack of confidence or the european thing a whole bunch of things crashing together. >>woodruff: is the president talking about it in the right way. is there anything he can do or does he say this is the way it is and hope for the best. >> i think what the president needs to do is draw a contrast in comparison between himself and govenor romney. this is what i, of course, staked out and i believe it's the right course but this is where he wants to take us.

and if that is where you want to go, especially if you want to go back. to me politically that is the only avenue open. i would say he missed a historic chance. this was a couple of years ago. he could have said what he was beginning to say. when you have financial crisis you have a lot of years of slow growth. we are going to take advantage of this situation to fix the structural things. we are going to fix the taxes and the entitlement system and the middle class jocks an-- jobs arounand the education. we are going to fix the deep problems that are plaguing this economy. if he said that he would have won himself sometime. the unemployment rate for college grads is at 4%. it's the high school grads and not the college grads that are suffering. that suggests something deep and structural and not sick sick li.

it's great to talk about entitlement reform. but in a time of economic suffering and pain, when the distribution of that pain has been felt by those at the lower end of the income barac barack . i question how plausible and acceptable that would have been at that time. >>woodruff: for the president? >> for the president or for anybody. there is no sense of universal sacrifice. we are now talking about you know, just i this example. we talked about the tax cuts of 2001 -2003 and 10% of the population has gotten 67% of the benefits from those tax cuts. that is what we are arguing with. >>woodruff: i'm going to change the subject. we clearly need to get the

olympics and to london. david, mitt romney arrived a few days ago and he has had a rough go of it. how do you size up the trip? >> he should have gone. there is no reason for him to go. i was told there was dissension of the staff that he should go. the elections are here. the gaffe of who what he said ws true. there are security issues. but you don't say it. it under scores a deep bein anxy that he is not running a great campaign. if you look at the obama campaign, it's a great a campai. he took jobs away with bane and they are going to turn to medicare and he now wants your medicare. that is your progression. you understand howker in doing their campaign. the romney campaign the people are saying we haven't hit yet but don't worry in a couple of months we are about to get on

track we are going to unveil who romney is and we are going to hit obama hard. this is a faith-based strategy. maybe they are going to start campaigning but not yet. this is a deepin anxiety that ty are not running campaign. it's the candidate that is over ruling what needs fo to be done. >> david is right. it's a gift for president obama for this trip. it's an unforced error. you expect someone to go to the united kingdom and praise judy dench and the royal family. what he was doing speculating about the olympics. the last thing you want is a monday morning quarterback on friday afternoon and telling you what could go wrong. the trip makes no sens to me-- sense to me. i think it draws attention to

the dressage factor, mrs. romney and. >>woodruff: her horse. >>. >> her horse. which is not joe six pack let's have a beer at the corner market. for a candidate that doesn't relate. what he is doing judy, sadly for him he is filling in the blanks. he can't talkgru$l-opitá>>woodrt he went to highlight the difference in his foreign policy to president obama's foreign policy. >> i guess that is the ideas. >>i guess he wanted to see the horse in dressage.

motorcyclmost americans warrante deesteeple chase. i don't know why he did it. i can see why obama went to israel. you highlight that but that is not what people are about. >>woodruff: bringing him back home the campaign is still running. we are going to look at two adds adds-- ad quickly. president obama came to the white house with big plans. he would half the deficit, strengthen the economy and lower unemployment. what did we get? national debt over 15 trillion and climbing. unemployment about 8% for 40 straight months and ongoing economic crisis with no end in sight. he tried, you tried, it's ok to make a change. the republican national committee is responsible for the could be tencontent of this adv.

we are a nation of workers and doers and dreamers. we work hard for what we get. and all we ask for is our hard work pays offer. offer-- off. i believe the way you grow the economy is from the middle up. i believe in fighting for the middle class because if they are prospering all of us will prosper. that is the idea of america and that is why america is the greatest nation on earth. i'm barack obama and i approve this message. >>woodruff: mark, we are told that obama spot is going to run tonight during the olympics. is that an effective spot or effective way of getting a message across. >> the president is more positive than the president campaign has been running. and filling in the blanks by their judgement on mitt romney and it's to draw contrast with mitt romney. and i have never heard the

ex-presentation we build from the middle out i have heard from the bottom up. the democratic party is the middle party. >>woodruff: the mi middle out. >> it does sound like a weight problem. hard work and values and putting him in t mainstream. the headman criticism report that pole poll have been too negative. >> the middle out is columbus, ohio out. maybe the mid west sort of thing. the basic dynamic of the campaign is romney has the economy and obama has-- romney. >> exactly. they each have each other it's like the odd couple. >>woodruff: not like the two of you. >> romney is going to say you don't mind this guy, he just can't do the job.

that is the strongest argument. and obama is going to say, i get your values. >> and to me the fundmental dynamics is we are going to see obama's character rise. they are both good ads. >> the romney ad was a better ad conceptually rather than in execution. the tone was good at first. you get 10% of people voting for barack obama in 2008 they are giving people permission to vote rather than not vote. in the midst e middle it becamea republican talking points. >>woodruff: more in sadness. >>. >> it's more in sadness than anger. th>> the best obama ads are whee

he is no speaking directly intoe camera. >> that is a good ad where he talks about the contrast of two messages. messages. >>woodruff: we'll show that next week as well as a romney ad. sweet talk david brooks and mark shield. thank you both. >> warner: and to china, where a high-stakes crime and politics story continues to unfold. the wife of an ousted communist party official has been charged with homicide. the news came in thursday's evening's news broadcast from state-run cctv. gu kailai, seen here with her charismatic then-popular politician husband bo xilai, is to be tried for the murder of british businessman neil heywood. authorities charge gu and a family aide killed heywood at this hotel in chongqing last november.

>> ( translated ): according to xinhua, the state news agency's release, the investigation results show that gu kailai and her son had conflicts with british citizen neil heywood over economic interests. gu kailai poisoned neil heywood to death in the consideration that heywood posed a threat to her son's security. >> warner: at the time, bo was the populist party boss of chongqing, angling for a more powerful post in the party hierarchy; his wife, a successful lawyer and businesswoman. their son, a reputed party boy, was at harvard's kennedy school. he had earlier studied in england with heywood's help. in a statement yesterday, the british foreign office said, "we are dedicated to seeking justice for heywood and his family, and we will be following developments closely." the indictment was the latest twist in a scandal that's rocked china's secretive communist party leadership, exposing its rifts and infighting. it began in february when this man, wang lijun, the former chongqing police chief, fled to

the u.s. consulate in nearby chengdu and implicated gu kaili in heywood's death. in april, bo was stripped of all his party posts, including his seat on the ruling politburo. he's under investigation by the party, reportedly for corruption and domestic spying, among other things. his wife gu will stand trial in the eastern city of hefei, hundreds of miles from chongqing, where bo remains popular. conviction could mean the death penalty. authorities are expected to proceed quickly to trial, possibly within ten days. that would dispose of the matter well before china's communist party congress convenes this fall to name new leadership for the nation. for more, we turn to james fallows, national correspondent for "the atlantic." his latest book is "china airborne."

>> my pleasure. >>. >> what do you make of this announcement, it's significance and it's typing. >>. type-- timing i think the announcement she has been formally indicted for murder. we have seen that coming. the story has a whole nobody hs considered this. her lawyers are not able to argue her innocence. and no one knows if she will get the death penalty or not. >> this won't be an american-style capital case where you have lawyers and pleadings and trials and appeals. >>. >> there are no judges. the lawyers will argue narrow grounds. they will say she was concerned for her son's welfare and that is why she should be punished in some other way than sentenced to death. what has been the political fall out from this for the communist party and for china? >> it's enormous. six months ago or a year ago

most people would have thought the husband of the gu kailai was a rising politician. he had been expecting to be one of the members of the standing committee which are the rulers of the china when the transition happens later this year. he was pioneering a kinds of politics that is significant in twtwo ways. reviving red era and the other is seen of a standing up for the people in china that have been the losers in the economic revolution of the last 30 years. he was a significant figure. >> did the dominate wing in the chinese party leadership see him as a threat? >> i think there are-- it's hard to say which wing is dominant. what is factional politics people around him and around other pom tions.-- politicians. >> and then there is the former red. the former premier was seen as--

and there is the corruption angle his line was anti-corruption and it suggests the tip of the iceberg of communist corruption more more generally. >> has this been threatening to the party by what they have been told about the corruption in the highest levels and high living in the highest levels. >> what people are fascinated about is the great historical drama novel of everything in china is happening in this. we have the last 30 years of economic success with all of the strains coming together in this person. if there are su suspicions by te average person in china being hurt by inflation and unemployment and losing their jobs and their land, people at the top have been getting more of the country's growth than

they thought. that is one of many problems for the party. >> and they often do it not the official himself takes bribes but these wives often have unusually lucrative jobs. >> yes indeed. yes. if you know, it's often the case mr. bo's salary as leader was modest. he had huge holdings. and his brother were gigantic business people and his wife was a business partner. she is being cast as the evil genius here. which is another human trait if we think back to mac beth. a kind of stock character. >> yes. nothing has been said about the fate of bo xilai other than he is under party investigation on discipline matters. >> and possible corruption. >>. >> give us a flavor of what that is like.

>> he has not been in the news for a while and nobody knows where he is the there are fascinatingly opposite theories on what is going to happen to him. one is his wife's indictment will soon bring him down and his son will be taken down with him, et cetera. another is that his wife will be peeled off enough from him and she will be the evil doerr and he will be the victim her tran transgressions. i would love to know where he is and what he thinks. before we go, how does this relate to the leadership transition that is going to take place in october in this fall meeting and to the next leader of china? >> i think the main point. we can say a lot, but the main thing to say is the world's second largest economy is going through a once a decade leadership shift an and so litte is known about the fundmentals

there it's more like the selection of the pop than a transferance of power. that is what makes it so dicey we know so little about the process. >> was bo xilai considered an up start challenging the factions that wanted to have the smooth transition and put this certain team in. >> if there was no corruption and no murder charge he would be part of the transition and the new standing committee. not the president but the next cadre after that. the very fact it falling around him. thank you. >> woodruff: again, the major developments of the day: the u.s. economy grew at a sluggish pace in the second quarter this year. wall street rallied again, on new pledges to keep the euro currency union intact. the dow industrials topped 13,000 for the first time since may. and the summer olympic games opened in london.

mark and david keep up the talk on the "doubleheader." that's on our web site coming up after this program. online, we give you a 360-degree look at stops on the campaign trail. kwame holman has more. >> holman: reporters on the ground offered up their photos, and we've assembled a slideshow of panoramic images to give a sense of what it's like to be at a campaign rally. that's on our home page. find margaret's take on the perils of an overseas trip for a presidential candidate. and ray suarez gets an assessment of this week's international aids conference in washington. he talked to two longtime observers about what was accomplished and what wasn't-- john donnelly of global post and jon cohen of "science" magazine. the big message is that we can do something now we couldn't do before. there was a break through last year. there was a finding that treatment is indeed prevention. people lo who are treated and

supress their virus levels don't transmit the virus much at all. the big question now is can you deliver on that promise? that is something that the meeting doesn't want to focus on. but the aspirations and the reality on the ground have a huge gap between them. >> what do you mean by that they don't want to focus on them. >> well you don't see anyone getting up and say you know what we have a huge mountain to climb. right now in the united states we have 1.2 million infected people. of those only 20% are supressed with treatment. if you want to slow the progression with treatment you have to do better than 28%. it sound way too early to take a victory. i>> it is way to early. we need to get more funding to fight aid.

-- aids. the administration has been hard pressed on how they will move ahead globally. hillary clinton made a call for a blueprint for further actions and she is now waiting for another five months. it's the conference moving ahead with the great hope but without much meat behind it. >> the epidemic is changing shape. in the united states it's moved from big cities and often white gay men who are economically stable, into young black gay men in the deep south. that is the ep bu ep epicentre . that is a huge shift and this country is wrestling with that. we are seeing the aging of hiv people, by 2020 half of the people inaffected ar-- inexpect-

infected are over 50. that is the same >> holman: watch all of ray's aids conference wrap-up on our health page. that and more is on our web site, newshour.pbs.org. margaret. >> warner: and that's the newshour for tonight. on monday, we'll look at presidential candidate mitt romney's trip to israel and his outreach to jewish voters back home. i'm margaret warner. >> woodruff: and i'm judy woodruff. "washington week" can be seen later this evening on most pbs stations. we'll see you online, and again here monday evening. have a nice weekend. thank you and good night. >> major funding for the pbs newshour has been provided by: bnsf >> and by the bill and melinda gates foundation. dedicated to the idea that all people deserve the chance to live a healthy, productive life. >> and with the ongoing support of these institutions and foundations. and... >> this program was made possible by the corporation for

public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh access.wgbh.org re

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